Koskisen’s year 2014

Managing Director Markku Koskinen

The general economic situation in Finland weakened
further, whereas in Europe the crisis sentiment shifted to cautious
growth expectations during the year. The strengthening U.S. economy and
robust dollar also created confidence that the opportunities of
euro-zone export companies would improve. At the end of the year, the
economic sanctions imposed on Russia as a result of its actions, as well
as the price of oil and the crash of the ruble, led to increased
economic uncertainty in Finland.

The Koskisen Group’s
financial performance improved in 2014. The company’s net sales in 2014
exceeded EUR 240 million (MEUR 220 in 2013), representing growth of
nearly 10 per cent. Operating profit was EUR 10.2 million (MEUR 5.8 in
2013). The main targets set for operations were met. Capital investments
amounted to approximately EUR 5 million, most of which was used to
modernise the second chipboard line.

The number of personnel increased by 76 and stood at 998,
with 866 employees working in Finland and 122 abroad. Employee
satisfaction increased on average compared to the last survey.
Operations will be developed further in 2015 on the basis of the
employee satisfaction survey. Productivity also developed favourably.

The deteriorating economic situation in Finland was also
strongly reflected in the demand for timber and construction products.
The dramatic decline in single-family housing starts, which began in
2011, continued in Finland and weakened the result and profitability of Koskisen Houses.
In professional construction, the project being realised in Vantaa, the
largest wooden block of flats to be built in Europe, became a major
employer. The weak construction activity also negatively affected demand
for chipboard and sawn timber.

The turnaround in Europe’s financial development improved
the demand for exports. Greater demand for plywood products resulted in
volume growth and product range optimisation. The sawn timber markets
started the year out positively, but took a downturn as a result of
rising oversupply in the markets.

The share of sales to markets outside Europe grew
proportionately faster. New target countries and new channels in old
export countries helped reinforce the development of the Group’s
long-term, customer-focussed sales. Demand for birch products also improved in 2014.

Wood procurement
in 2014 was smooth, thanks to well-balanced supply and demand in
private forest harvesting operations. The price for timber assortment
classes was stable. The Group purchased 1.8 million cubic metres of
timber, more than one million of which for its own purposes, and sold
more than 600,000 cubic metres of pulpwood and energy wood.

The outlook for 2015 is uncertain. The drastic change in
the price of oil will affect operations in many ways. The situation in
Ukraine and Russia and the growing unrest in the Middle East are also
causing economic uncertainty. In 2015 we will continue to develop our
productivity, well-being at work and safety. The objective remains to
grow Koskisen’s net sales and profitability.

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